S&P 500 crosses 3,000 for a initial time ever after Fed Chair Powell suggests rate cut

U.S. bonds finished aloft Wednesday, pulling behind rather from record highs after remarks from Federal Reserve Chair Jerome Powell’s congressional testimony suggested a executive bank remained open to a near-term rate cut.

The SP 500 (^GSPC) modernized 0.45%, or 13.44 points, as of marketplace close, with a appetite zone heading gains as domestic wanton oil prices (CL=F) rose 4%. The blue chip index pared some gains to tighten during 2,993.07 points, after progressing attack a new intraday high of 3,002.98. This noted a initial time ever that a SP 500 crossed a 3,000 level.

The Dow (^DJI) rose 0.29%, or 76.71 points, and also came off a highs of a day by marketplace close. The 30-stock index reached a new record intraday high of 26,983.4 points.

The Nasdaq (^IXIC) increasing 0.75%, or 60.8 points, retreating rather after attack a new intraday high of 8,228.6.

Treasury yields fluctuated in a arise of a initial of dual days of Powell’s congressional testimony. The some-more policy-sensitive brief tenure supervision bond yields fell sharply, with a two-year produce down 7.7 basement points to 1.828% around 4 p.m. ET. Treasury yields pierce inversely to prices.

Powell delivered his semi-annual Monetary Policy Report before Congress in a some-more than 3 hour event Wednesday morning. In prepared remarks, Powell pronounced that “uncertainties” around trade tensions and a strength of a tellurian economy continued to fen a executive bank’s U.S. mercantile outlook. He reiterated that many Fed officials during a Jun assembly saw that “the box for a rather some-more accommodative financial process had strengthened.”

‘Insurance’

Ahead of Powell’s address, equity markets were entertaining for Powell to attest that a Fed would pierce brazen with easier financial policy, even after stronger-than-expected practice information final week reflected a still-strong domestic economy. As a testimony carried on, many observers believed a Powell had all though guaranteed that a executive bank would cut rates by a finish of a Jul meeting.

“The Fed seems to be peaceful to boot a improved information from a U.S. and instead is focusing on a weaker tellurian data,” Bank of America Merrill Lynch analysts wrote in a note Wednesday afternoon. “Indeed, when Powell was asked if a clever jobs news altered his views on cuts, he settled ‘no.’”

Other economists interpreted Powell’s remarks similarly.

“Chair Jerome Powell’s semi-annual testimony to Congress indicates that, notwithstanding a trade equal following a new G-20 assembly and a strength of practice enlargement in June, a Fed intends to pull forward with a rate cut during a FOMC assembly during a finish of this month,” Paul Ashworth, arch U.S. economist for Capital Economics, wrote in a note.

“The rate cut is an word opposite a downside risks that Fed officials trust have mounted in new months as ‘economic movement appears to have slowed in some vital unfamiliar economies’ with ‘crosscurrents,’ such as trade tensions and those tellurian enlargement concerns, weighing on U.S. mercantile activity,” Ashworth explained.

Traders work on a building of a New York Stock Exchange as Federal Reserve Chairman Jerome Powell binds a news discussion on a radio behind them in New York, U.S., Jun 19, 2019. REUTERS/Lucas JacksonTraders work on a building of a New York Stock Exchange as Federal Reserve Chairman Jerome Powell binds a news discussion on a radio behind them in New York, U.S., Jun 19, 2019. REUTERS/Lucas Jackson

Earlier Wednesday morning, fed supports futures had showed a slim luck of no change to a stream turn of borrowing costs after a Fed’s Jul assembly for a initial time in weeks, according to CME Group data. However, after Powell’s prepared remarks were released, futures re-calibrated to uncover markets pricing in a 100% luck of an during slightest 25 basement indicate cut to benchmark seductiveness rates.

Wednesday afternoon, a Fed released a minutes from a Jun 18-19 process meeting, that mostly reiterated sentiments from Powell’s testimony. The request supposing sum of how executive bankers noticed risks from a trade fight between a U.S. and China, before a assembly between President Donald Trump and China’s Xi Jinping took place during a G-20 summit.

On Tuesday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on a phone with China’s Vice Premier Liu He and Commerce Minister Zhong Shan, China’s Ministry of Commerce confirmed in a matter Wednesday. Few sum were supposing over a essence of a phone call, that noted a initial reliable hit between a dual sides given Trump and Xi met final month and pronounced they would resume trade talks.

Elsewhere, a euro-area continued to be dragged down by trade tensions and process concerns, according to a new comment from a a European Commission. The elect on Tuesday cut a euro-area enlargement foresee for 2020 to 1.4%, from a 1.5% gait of boost approaching in a spring. It also slashed a acceleration foresee for both 2019 and 2020 to 1.3%, down from 1.4% for any year seen previously.

Meanwhile, economic enlargement in a U.K. rebounded in May to a 0.3% gait of expansion, after constrictive by 0.4% in April, a Office for National Statistics reported Wednesday. The economy grew a better-than-expected 0.3% for a 3 months to a finish of May, amid an easing of concerns of a no-deal Brexit after Mar and April.

Emily McCormick is a contributor for Yahoo Finance. Follow her on Twitter: @emily_mcck

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